Auto Day

The CEO"s of GM, Ford, and Chrysler will appear in front of congress again today to plead for government financial support. Ford may not need money but GM and Chrysler are in dire need before the year is out. As we have said in the past, the best help these companies should get is a government loan once they file for a prepackaged bankruptcy. Time is running out but the unions and the creditors need to work with the auto companies as they downsize and focus on becoming more efficient. The consumer needs to understand that bankruptcy does not mean cars won't be produced but that the company is being reorganized to become stronger and better in the future. The government should not loan GM money today with its current capital structure. It will just be throwing taxpayer money away. The government can provide loans in bankruptcy where it becomes the senior creditor. It can also ease consumer concerns by guaranteeing warranties but it is up to management to present a formidable plan to become profitable in the future.